Why is the FCA court ruling on Business Insurance so Important?
The FCA who regulate the financial markets were concerned at the levels of insurance claims being declined by insurers as a result of claims in respect of business interruption insurance. Many businesses who believe that they were covered as they rightly should be concerning the interruption of their business was soon dismissed by insurers on technicalities. The insurers believing or certainly arguing that policies did not cover the economic shutdown as a result of Coronavirus ‘the disease’
London Court Rules Some Insurers Should Not Have Denied Business Interruption Claims
The financial conduct authority began a test case in the High Court during the summer regarding this against the policy wording of a number of insurers. The courts on 15 September 2020 found that most, but not all (which is an important part to remember), of the clauses used in relation to diseases did provide cover and that policies should pay out.
However, it is important to remember that we are dealing with financial services organisations and as such insurers are likely, bearing in mind the amounts involved, running into several billions with several hundred thousand businesses affected, to challenge this decision through the courts. At the very least regardless of this court ruling or any other court rulings in the future insurers are likely to decline a number of claims in order to protect their own financial position regardless of this ruling.
The lawsuit has been closely watched because it is estimated to affect 370,000 businesses and billions in insurance claims.
The regulator has estimated the case could affect more than 60 insurers and 700 different types of policies because many insurance policies have similar wording.
It estimated its UK business interruption claims exposure at around A$170 million ($124 million) before allowing for recoveries under the group’s catastrophe reinsurance protections. (insurancejournal.com)
Why is your business interruption insurance being declined
The simple reason why insurance companies declined insurance policies was to protect their own positions and they will continue to do so regardless of the legal narrative. Indeed the Association of British insurers has already stated that the judgement is technical and complex. These words are synonymous with financial firms and their ability and aim to deflect claims both in place and in the future where the insurance companies wish to avoid paying out on a deluge of claims.
Why is the FCA court ruling on business insurance so important
Regardless of how the insurance companies react this is an important step regarding claims and protecting businesses throughout the community which are the lifeblood of our society. If you have had a claim declined or are looking to start a claim it is vital that you see this through to the end. As a firm we are well practised in dealing with financial cases both with firms and through to the ombudsman service if necessary on behalf of clients where we work on a purely no win no fee basis
Business Owners closing their doors when Covid Strikes!
When everyone in business was looking on in amazement and disbelief as the doors to our society were firmly shut in March 2020, the future at best look bleak. No one knew how their own business would survive and get through pandemic and lockdown both in the short term and the future. Plans were shelved in the air of uncertainty was palpable. Huge rafts of economic stimulus packages from the governments around the world were announced but still uncertainty reared its head. It then came as a shock that the cover businesses had arranged in good faith and against a financial cost to the business was being refused by the insurers on a wholesale basis regardless of the type business and merit of any claim.